Company Quarterly Earnings Update – TNH VN – Q3 2022

Summary of the Q3/2022 results of Thai Nguyen International General Hospital JSC (TNH VN)

9M/2022 Result & Outlook:

  • 9M/2022’s net revenue grew by 9.6% y/y to VND338bn, with the number of patients reaching 311,207 patients (+14.8% y/y).
  • The gross margin declined from 52.4% to 44.7% caused by (1) a low gross margin in Q1 during the pandemic, (2) an additional depreciation and increase in labor costs, and (3) higher prices of imported medical supplies and drugs given the strengthening of the USD globally. SG&A expenses as a percentage of sales increased moderately by 6.1% in 9M/2022 due to (1) a salary increase for back-office labors due to a new provincial basic salary policy, (2) more staff have been recruited to prepare for their expansion, and (3) healthcare seminars with medical professionals were held nationwide to improve TNH’s reputation. All in all, net profit decreased by 10% to VND99bn.
  • Project updates: TNH expects to commence the construction of Viet Yen GH in Bac Giang province in Q4/2022 and open in Q2/2024. The construction of the Maternity and Ophthalmic Hospitals will start in the end of 2022 or Q1/2023 and is expected to complete in Q4/2023.
  • For 2022: in Q4/2022, revenue is expected to rebound from last year’s low base during the severe pandemic, together with a 15% increase in the healthcare fees resulting in a 42.6% y/y growth in revenue to VND148bn. However, due to the lower-than-expected 9M2022, we revised down 2022F net revenue by 4.5% to VND486bn (+17.9% y/y). The total number of patients is expected to reach 440,636 (+16.9% y/y). Furthermore, financial expenses are revised up by 2.9% due to the recent 200bps rate increases by the State Bank of Vietnam. All in all, 2022F net profit is predicted to reach VND154bn (+8.4% y/y), 11.1% lower than our previous estimation.
  • For 2023: TNH’s reputation is well recognized by the market; the public healthcare system is overloaded and FDI investment has grown strongly in 9M2022 in Thai Nguyen. These factors will be TNH’s future growth drivers. 2023F net revenue is expected to increase 29.2% y/y to VND628bn thanks to (1) a 16.8% growth in current hospitals and (2) new contributions from the Maternity and Ophthalmic hospitals which are expected to start from Q4/2023. The gross margin will decline to 40.0% (vs 45.9% of 2022) due to the low utilization rate of these new hospitals which are still unprofitable. Overall, net profit is retained as per our latest forecast of VND174bn (+13.0% y/y).


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